Exhibit
10.1


 


VARIAN
MEDICAL SYSTEMS, INC.


 


OMNIBUS
STOCK PLAN


 


(Amended
and restated to reflect the July 30, 2004 two-for-one stock split)


 

















 


TABLE OF
CONTENTS


 


	
  SECTION 1

  	
   

  	
  BACKGROUND,
  PURPOSE AND DURATION

  	
   

  
	
   

  	
   

  	
   

  
	
  1.1

  	
  Effective Date

  	
   

  
	
  1.2

  	
  Purpose of the Plan

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 2

  	
   

  	
  DEFINITIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  “1934 Act”

  	
   

  
	
  2.2

  	
  “Affiliate”

  	
   

  
	
  2.3

  	
  “Award”

  	
   

  
	
  2.4

  	
  “Award Agreement”

  	
   

  
	
  2.5

  	
  “Board”

  	
   

  
	
  2.6

  	
  “Code”

  	
   

  
	
  2.7

  	
  “Committee”

  	
   

  
	
  2.8

  	
  “Company”

  	
   

  
	
  2.9

  	
  “Consultant”

  	
   

  
	
  2.10

  	
  “Director”

  	
   

  
	
  2.11

  	
  “Disability”

  	
   

  
	
  2.12

  	
  “EBIT”

  	
   

  
	
  2.13

  	
  “EBITDA”

  	
   

  
	
  2.14

  	
  “Earnings Per Share”

  	
   

  
	
  2.15

  	
  “Employee”

  	
   

  
	
  2.16

  	
  “Exercise Price”

  	
   

  
	
  2.17

  	
  “Fair Market Value”

  	
   

  
	
  2.18

  	
  “Fiscal Year”

  	
   

  
	
  2.19

  	
  “Grant
  Date”

  	
   

  
	
  2.20

  	
  “Incentive Stock Option”

  	
   

  
	
  2.21

  	
  “Net
  Income”

  	
   

  
	
  2.22

  	
  “Non-employee Director”

  	
   

  
	
  2.23

  	
  “Non-qualified Stock Option”

  	
   

  
	
  2.24

  	
  “Operating Cash Flow”

  	
   

  
	
  2.25

  	
  “Option”

  	
   

  
	
  2.26

  	
  “Participant”

  	
   

  
	
  2.27

  	
  “Performance Goals”

  	
   

  
	
  2.28

  	
  “Performance Period”

  	
   

  
	
  2.29

  	
  “Performance Share”

  	
   

  
	
  2.30

  	
  “Performance Unit”

  	
   

  
	
  2.31

  	
  “Period of Restriction”

  	
   

  
	
  2.32

  	
  “Plan”

  	
   

  
	
  2.33

  	
  “Restricted Stock”

  	
   

  
	
  2.34

  	
  “Retirement”

  	
   

  
	
  2.35

  	
  “Return on Assets”

  	
   

  
	
  2.36

  	
  “Return on Equity

  	
   

  
	
  2.37

  	
  “Return on Sales”

  	
   

  
	
  2.38

  	
  “Revenue”

  	
   

  
	
  2.39

  	
  “Rule
  16b-3”

  	
   

  
	
  2.40

  	
  “Section 16 Person”

  	
   

  
	
  2.41

  	
  “Shareholder Return”

  	
   

  
	
  2.42

  	
  “Shares”

  	
   

  
	
  2.43

  	
  “Stock Appreciation Right”

  	
   

  
	
  2.44

  	
  “Subsidiary”

  	
   

  
	
  2.45

  	
  “Termination of Service”

  	
   

  
	
  2.46

  	
  “VAI”

  	
   

  
					



 


i

















 


	
  SECTION 3

  	
   

  	
  ADMINISTRATION

  	
   

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  The Committee

  	
   

  
	
  3.2

  	
  Authority of the Committee

  	
   

  
	
  3.3

  	
  Delegation by the Committee

  	
   

  
	
  3.4

  	
  Non-employee Directors

  	
   

  
	
  3.5

  	
  Decisions Binding

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 4

  	
   

  	
  SHARES
  SUBJECT TO THE PLAN

  	
   

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Number of Shares

  	
   

  
	
  4.2

  	
  Lapsed Awards

  	
   

  
	
  4.3

  	
  Adjustments in
  Awards and Authorized Shares

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 5

  	
   

  	
  STOCK
  OPTIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  Grant of Options

  	
   

  
	
  5.2

  	
  Award Agreement

  	
   

  
	
  5.3

  	
  Exercise Price

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  5.3.1

  	
  Non-qualified Stock Options

  	
   

  
	
   

  	
  5.3.2

  	
  Incentive Stock Options

  	
   

  
	
   

  	
  5.3.3

  	
  Substitute Options

  	
   

  
	
   

  	
   

  	
   

  
	
  5.4

  	
  Expiration of Options.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  5.4.1

  	
  Expiration Dates

  	
   

  
	
   

  	
  5.4.2

  	
  Death of Participant

  	
   

  
	
   

  	
  5.4.3

  	
  Committee Discretion

  	
   

  
	
   

  	
   

  	
   

  
	
  5.5

  	
  Exercisability of Options

  	
   

  
	
  5.6

  	
  Payment

  	
   

  
	
  5.7

  	
  Restrictions on Share Transferability

  	
   

  
	
  5.8

  	
  Certain
  Additional Provisions for Incentive Stock Options

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  5.8.1

  	
  Exercisability

  	
   

  
	
   

  	
  5.8.2

  	
  Termination of Service

  	
   

  
	
   

  	
  5.8.3

  	
  Company and Subsidiaries Only

  	
   

  
	
   

  	
  5.8.4

  	
  Expiration

  	
   

  
	
   

  	
   

  	
   

  
	
  5.9

  	
  Grant of Reload Options

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 6

  	
   

  	
  STOCK
  APPRECIATION RIGHTS

  	
   

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  Grant of SARs

  	
   

  
	
  6.2

  	
  Exercise Price and Other
  Terms

  	
   

  
	
  6.3

  	
  SAR Agreement

  	
   

  
	
  6.4

  	
  Expiration of SARs

  	
   

  
	
  6.5

  	
  Payment of SAR Amount

  	
   

  
	
  6.6

  	
  Payment Upon Exercise of SAR

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 7

  	
   

  	
  RESTRICTED
  STOCK

  	
   

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  Grant of Restricted Stock

  	
   

  
	
  7.2

  	
  Restricted Stock Agreement

  	
   

  
	
  7.3

  	
  Transferability

  	
   

  
	
  7.4

  	
  Other Restrictions

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  7.4.1

  	
  General Restrictions

  	
   

  
	
   

  	
  7.4.2

  	
  Section 162(m)
  Performance Restrictions

  	
   

  
	
   

  	
  7.4.3

  	
  Legend on Certificates

  	
   

  
							



 


ii

















 


	
  7.5

  	
  Removal of Restrictions

  	
   

  
	
  7.6

  	
  Voting Rights

  	
   

  
	
  7.7

  	
  Dividends and Other
  Distributions

  	
   

  
	
  7.8

  	
  Return of Restricted
  Stock to Company

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8

  	
   

  	
  PERFORMANCE
  UNITS AND PERFORMANCE SHARES

  	
   

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  Grant of
  Performance Units and Shares

  	
   

  
	
  8.2

  	
  Initial Value

  	
   

  
	
  8.3

  	
  Performance
  Objectives and Other Terms

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  8.3.1

  	
  General Performance
  Objectives

  	
   

  
	
   

  	
  8.3.2

  	
  Section 162(m) Performance Objectives

  	
   

  
	
   

  	
   

  	
   

  
	
  8.4

  	
  Earning of
  Performance Units and Performance Shares

  	
   

  
	
  8.5

  	
  Form and Timing of Payment

  	
   

  
	
  8.6

  	
  Cancellation

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 9

  	
   

  	
  NON-EMPLOYEE
  DIRECTORS

  	
   

  
	
   

  	
   

  	
   

  
	
  9.1

  	
  Granting of Options

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  9.1.1

  	
  Non-employee Directors

  	
   

  
	
   

  	
  9.1.2

  	
  Chairman

  	
   

  
	
   

  	
   

  	
   

  
	
  9.2

  	
  Terms of Options

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  9.2.1

  	
  Option Agreement

  	
   

  
	
   

  	
  9.2.2

  	
  Exercise
  Price

  	
   

  
	
   

  	
  9.2.3

  	
  Exercisability

  	
   

  
	
   

  	
  9.2.4

  	
  Expiration of Options

  	
   

  
	
   

  	
  9.2.5

  	
  Death of Director

  	
   

  
	
   

  	
  9.2.6

  	
  Not Incentive Stock Options

  	
   

  
	
   

  	
  9.2.7

  	
  Other Terms

  	
   

  
	
   

  	
   

  	
   

  
	
  9.3

  	
  Substitute Options.

  	
   

  
	
  9.4

  	
  Elections by Non-employee
  Directors

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 10

  	
   

  	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  10.1

  	
  No Effect on Employment or
  Service

  	
   

  
	
  10.2

  	
  Participation

  	
   

  
	
  10.3

  	
  Indemnification

  	
   

  
	
  10.4

  	
  Successors

  	
   

  
	
  10.5

  	
  Beneficiary Designations

  	
   

  
	
  10.6

  	
  Nontransferability of
  Awards

  	
   

  
	
  10.7

  	
  No Rights as Stockholder

  	
   

  
	
  10.8

  	
  Withholding Requirements

  	
   

  
	
  10.9

  	
  Withholding Arrangements

  	
   

  
	
  10.10

  	
  Deferrals

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 11

  	
   

  	
  AMENDMENT,
  TERMINATION AND DURATION

  	
   

  
	
   

  	
   

  	
   

  
	
  11.1

  	
  Amendment,
  Suspension or Termination

  	
   

  
	
  11.2

  	
  Duration of the Plan

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 12

  	
   

  	
  LEGAL
  CONSTRUCTION

  	
   

  
	
   

  	
   

  	
   

  
	
  12.1

  	
  Gender and Number

  	
   

  
	
  12.2

  	
  Severability

  	
   

  
	
  12.3

  	
  Requirements of Law

  	
   

  
	
  12.4

  	
  Governing Law

  	
   

  
	
  12.5

  	
  Captions

  	
   

  
					



 


iii

















 


VARIAN
MEDICAL SYSTEMS, INC.


OMNIBUS
STOCK PLAN


(as
amended and restated to reflect the July 30, 2004 two-for-one stock split)


 


SECTION 1


BACKGROUND,
PURPOSE AND DURATION


 


1.1                                 Effective Date. 
This amended and restated Plan is effective as of the date on which VAI
distributes the shares of the common stock of Varian, Inc. and Varian
Semiconductor Equipment Associates, Inc. to the stockholders of VAI, subject to
the approval of the Plan by a majority of the shares of the common stock of VAI
which are present in person or by proxy and entitled to vote at the 1999 Annual
and Special Meeting of the Stockholders of VAI.


 


Purpose of the Plan.  The Plan is intended to increase incentives
and to encourage Share ownership on the part of (1) employees of the Company
and its Affiliates, (2) consultants who provide significant services to the
Company and its Affiliates, and (3) directors of the Company who are employees
of neither the Company nor any Affiliate. 
The Plan also is intended to further the growth and profitability of the
Company.  The Plan is intended to permit
the grant of Awards that qualify as performance-based compensation under
section 162(m) of the Code.


 


SECTION 2


DEFINITIONS


 


The following words and phrases shall have the following
meanings unless a different meaning is plainly required by the context:


 


2.1                                 “1934
Act” means the
Securities Exchange Act of 1934, as amended. 
Reference to a specific section of the 1934 Act or regulation
thereunder shall include such section or regulation, any valid regulation
promulgated under such section, and any comparable provision of any future
legislation or regulation amending, supplementing or superseding such
section or regulation.


 


2.2                                 “Affiliate” means any corporation or any other entity
(including, but not limited to, partnerships and joint ventures) controlling,
controlled by, or under common control with the Company.


 


2.3                                 “Award” means, individually or collectively, a grant under
the Plan of Non-qualified Stock Options, Incentive Stock Options, SARs,
Restricted Stock, Performance Units or Performance Shares.


 


2.4                                 “Award Agreement” means the written agreement
setting forth the terms and provisions applicable to each Award granted under
the Plan.


 


2.5                                 “Board” means the Board of Directors of the Company.


 


2.6                                 “Code” means the Internal Revenue Code of 1986, as
amended.  Reference to a specific
section of the Code or regulation thereunder shall include such
section or regulation, any valid regulation promulgated thereunder, and
any comparable provision of any future legislation or regulation amending,
supplementing or superseding such section or regulation.


 


2.7                                 “Committee” means the committee appointed by the Board
(pursuant to Section 3.1) to administer the Plan.


 


2.8                                 “Company” means Varian Medical Systems, Inc., a Delaware
corporation, or any successor thereto.


 


2.9                                 “Consultant” means any consultant, independent
contractor, or other person who provides significant services to the Company or
its Affiliates, but who is neither an Employee nor a Director.


 


1

















 


2.10                           “Director” means any individual who is a member of the
Board.


 


2.11                           “Disability” means a permanent and total disability
within the meaning of section 22(e)(3) of the Code, provided that in the
case of Awards other than Incentive Stock Options, the Committee in its
discretion may determine whether a permanent and total disability exists in
accordance with uniform and non-discriminatory standards adopted by the
Committee from time to time.


 


2.12                           “EBIT” means as to any Performance Period, the Company’s or
a business unit’s income before reductions for interest and taxes, determined
in accordance with generally accepted accounting principles.


 


2.13                           “EBITDA” means as to any Performance Period, the
Company’s or a business unit’s income before reductions for interest, taxes,
depreciation and amortization, determined in accordance with generally accepted
accounting principles.


 


2.14                           “Earnings Per Share” means as to any
Performance Period, the Company’s or a business unit’s Net Income, divided by a
weighted average number of common shares outstanding and dilutive common
equivalent shares deemed outstanding, determined in accordance with generally
accepted accounting principles.


 


2.15                           “Employee” means any employee of the Company or of an
Affiliate, whether such employee is so employed at the time the Plan is adopted
or becomes so employed subsequent to the adoption of the Plan.


 


2.16                           “Exercise Price” means the price at which a Share
may be purchased by a Participant pursuant to the exercise of an Option.


 


2.17                           “Fair Market Value” means the last quoted per
share selling price for Shares on the relevant date, or if there were no sales
on such date, the arithmetic mean of the highest and lowest quoted selling
prices on the nearest day before and the nearest day after the relevant date,
as determined by the Committee. 
Notwithstanding the preceding, for federal, state and local income tax
reporting purposes, fair market value shall be determined by the Committee in
accordance with uniform and nondiscriminatory standards adopted by it from time
to time.


 


2.18                           “Fiscal Year” means the fiscal year of the Company.


 


2.19                           “Grant Date” means, with respect to an Award, the date
that the Award was granted.


 


2.20                           “Incentive Stock Option” means an Option to
purchase Shares which is designated as an Incentive Stock Option and is
intended to meet the requirements of section 422 of the Code.


 


2.21                           “Net Income” means as to any Performance Period, the
Company’s or a business unit’s income after taxes, determined in accordance
with generally accepted accounting principles.


 


2.22                           “Non-employee Director” means a Director who
is an employee of neither the Company nor of any Affiliate.


 


2.23                           “Non-qualified Stock Option” means an option
to purchase Shares which is not intended to be an Incentive Stock Option.


 


2.24                           “Operating Cash Flow” means as to any
Performance Period, the Company’s or a business unit’s sum of Net Income plus
depreciation and amortization less capital expenditures plus changes in working
capital comprised of accounts receivable, inventories, other current assets,
trade accounts payable, accrued expenses, product warranty, advance payments
from customers and long-term accrued expenses, determined in accordance with generally
acceptable accounting principles.


 


2.25                           “Option” means an Incentive Stock Option or a
Non-qualified Stock Option.


 


2

















 


2.26                           “Participant” means an Employee, Consultant, or
Non-employee Director who has an outstanding Award.


 


2.27                           “Performance Goals” means the goal(s) (or
combined goal(s)) determined by the Committee (in its discretion) to be
applicable to a Participant with respect to an Award.  As determined by the Committee, the Performance Goals applicable
to an Award may provide for a targeted level or levels of achievement using one
or more of the following measures:   (a)
EBIT, (b) EBITDA, (c) Earnings Per Share, (d) Net Income, (e) Operating Cash
Flow, (f) Return on Assets, (g) Return on Equity, (h) Return on Sales, (i)
Revenue, and (j) Shareholder Return. 
The Performance Goals may differ from Participant to Participant and
from Award to Award.  Prior to the
Determination Date, the Committee shall determine whether any significant
element(s) shall be included in or excluded from the calculation of any
Performance Goal with respect to any Participant.  “Determination Date” means the latest possible date that will not
jeopardize an Award’s qualification as performance-based compensation under
section 162(m) of the Code. 
Notwithstanding the previous sentence, for Awards not intended to
qualify as performance-based compensation, “Determination Date” shall mean such
date as the Committee may determine in its discretion.


 


2.28                           “Performance Period” means any fiscal period
not to exceed three consecutive Fiscal Years, as determined by the Committee in
its sole discretion.


 


2.29                           “Performance Share” means a Performance Share
granted to a Participant pursuant to Section 8.


 


2.30                           “Performance Unit” means a Performance Unit
granted to a Participant pursuant to Section 8.


 


2.31                           “Period of Restriction” means the period
during which shares of Restricted Stock are subject to forfeiture and/or
restrictions on transferability.


 


2.32                           “Plan” means the Varian Medical Systems, Inc. Omnibus Stock
Plan, as set forth in this instrument and as hereafter amended from time to
time.


 


2.33                           “Restricted Stock” means an Award granted to a
Participant pursuant to Section 7.


 


2.34                           “Retirement” means, in the case of an Employee or a Non-employee
Director, “Retirement” as defined pursuant to the Company’s or the Board’s
Retirement Policies, as they may be established from time to time.  With respect to a Consultant, no Termination
of Service shall be deemed to be on account of “Retirement.”


 


2.35                           “Return on Assets” means as to any Performance
Period, the percentage equal to the Company’s or a business unit’s EBIT before
incentive compensation, divided by average net Company or business unit, as
applicable, assets, determined in accordance with generally accepted accounting
principles.


 


2.36                           “Return on Equity”
means as to any Performance Period, the percentage equal to the Company’s Net
Income divided by average stockholder’s equity, determined in accordance with
generally accepted accounting principles.


 


2.37                           “Return on Sales” means as to any Performance
Period, the percentage equal to the Company’s or a business unit’s EBIT before
incentive compensation, divided by the Company’s or the business unit’s, as
applicable, Revenue, determined in accordance with generally accepted
accounting principles.


 


2.38                           “Revenue” means as to any Performance Period, the
Company’s or a business unit’s net sales, determined in accordance with
generally accepted accounting principles.


 


2.39                           “Rule 16b-3” means Rule 16b-3 promulgated under the
1934 Act, as amended, and any future regulation amending, supplementing or
superseding such regulation.


 


3

















 


2.40                           “Section 16 Person” means a person who,
with respect to the Shares, is subject to section 16 of the 1934 Act.


 


2.41                           “Shareholder Return” means as to any
Performance Period, the total return (change in share price plus reinvestment
of any dividends) of a Share.


 


2.42                           “Shares” means shares of the Company’s common stock,
$1.00 par value.


 


2.43                           “Stock Appreciation Right” or “SAR” means
an Award, granted alone, in connection or in tandem with a related Option, that
pursuant to Section 6 is designated as a SAR.


 


2.44                           “Subsidiary” means any corporation in an unbroken
chain of corporations beginning with the Company if each of the corporations
other than the last corporation in the unbroken chain then owns stock
possessing fifty percent (50%) or more of the total combined voting power of
all classes of stock in one of the other corporations in such chain.


 


2.45                           “Termination of Service” means (a) in the
case of an Employee, a cessation of the employee-employer relationship between
an Employee and the Company or an Affiliate for any reason, including, but not
by way of limitation, a termination by resignation, discharge, death,
Disability, Retirement, or the disaffiliation of an Affiliate, but excluding
any such termination where there is a simultaneous reemployment by the Company
or an Affiliate; (b) in the case of a Consultant, a cessation of the service
relationship between a Consultant and the Company or an Affiliate for any
reason, including, but not by way of limitation, a termination by resignation,
discharge, death, Disability, or the disaffiliation of an Affiliate, but excluding
any such termination where there is a simultaneous re-engagement of the
consultant by the Company or an Affiliate; and (c) in the case of a
Non-employee Director, a cessation of the Non-employee Director’s service on
the Board for any reason.


 


2.46                           “VAI” means Varian Associates, Inc., a Delaware corporation.


 


SECTION 3


ADMINISTRATION


 


3.1                                 The Committee. 
The Plan shall be administered by the Committee.  The Committee shall consist of not less than
two (2) Directors.  The members of the Committee
shall be appointed from time to time by, and serve at the pleasure of, the
Board.  Each member of the Committee
shall qualify as (a) a “non-employee director” under Rule 16b-3, and (b) an
“outside director” under section 162(m) of the Code.  If it is later determined that one or more
members of the Committee do not so qualify, actions taken by the Committee
prior to such determination shall be valid despite such failure to qualify.


 


3.2                                 Authority of the Committee. 
It shall be the duty of the Committee to administer the Plan in
accordance with the Plan’s provisions. 
The Committee shall have all powers and discretion necessary or
appropriate to administer the Plan and to control its operation, including, but
not limited to, the power to (a) determine which Employees and Consultants
shall be granted Awards, (b) prescribe the terms and conditions of the Awards
(other than the Options granted to Non-employee Directors pursuant to
Section 9), (c) interpret the Plan and the Awards, (d) adopt such
procedures and subplans as are necessary or appropriate to permit participation
in the Plan by Employees, Consultants and Directors who are foreign nationals
or employed outside of the United States, (e) adopt rules for the
administration, interpretation and application of the Plan as are consistent
therewith, and (f) interpret, amend or revoke any such rules.  Notwithstanding any contrary provision of
the Plan, the Committee may reduce the amount payable under any Award (other
than an Option) after the grant of such Award.


 


3.3                                 Delegation by the Committee.  The Committee, in its sole discretion and on
such terms and conditions as it may provide, may delegate all or any part of
its authority and powers under the Plan to one or more directors and/or
officers of the Company; provided, however, that the Committee may not delegate
its authority and powers (a) with respect to Section 16 Persons, (b) in
any way which would jeopardize the Plan’s qualification under Rule 16b-3, or
(c) with respect to awards which are intended to qualify as performance-based
compensation under section 162(m) of the Code.


 


4

















 


3.4                                 Non-employee Directors.  Notwithstanding any contrary provision of
this Section 3, the Board shall administer Section 9 of the Plan, and
the Committee shall exercise no discretion with respect to Section 9.  In the Board’s administration of
Section 9 and the Options and any Shares granted to Non-employee
Directors, the Board shall have all of the authority and discretion otherwise
granted to the Committee with respect to the administration of the Plan.


 


3.5                                 Decisions Binding.  All determinations and decisions made by the Committee, the
Board, and any delegate of the Committee pursuant to the provisions of the Plan
shall be final, conclusive, and binding on all persons, and shall be given the
maximum deference permitted by law.


 


SECTION 4


SHARES
SUBJECT TO THE PLAN


 


4.1                                 Number of Shares.  Subject to adjustment as provided in Section 4.3, the total
number of Shares available for grant under the Plan shall not exceed 1,919,250,
plus such number of Shares as are granted pursuant to substitute Options under
Sections 5.3.3 and 9.3 in connection with the distribution of Shares to the
stockholders of VAI.  Shares granted
under the Plan may be either authorized but unissued Shares or treasury Shares.


 


4.2                                 Lapsed Awards. 
If an Award terminates, expires, or lapses for any reason, any Shares
subject to such Award again shall be available to be the subject of an Award.
In addition, if any Shares are tendered to the Company (whether by physical
delivery or attestation) as full or partial payment for the exercise of an
Option or in satisfaction of a tax withholding obligation pursuant to an Award,
only the net Shares issued shall be deemed granted for purposes of determining
the maximum number of Shares that may be granted under Section 4.1.  Also, Shares granted pursuant to Awards
assumed or granted in substitution of other awards in connection with the acquisition
by the Company of an unrelated entity shall not reduce the maximum number of
Shares issuable under Section 4.1.


 


4.3                                 Adjustments in Awards and Authorized
Shares.  In the event of any merger,
reorganization, consolidation, recapitalization, separation, liquidation, stock
dividend, split-up, Share combination, or other change in the corporate
structure of the Company affecting the Shares, the Committee shall adjust the
number and class of Shares which may be delivered under the Plan, the number,
class, and price of Shares subject to outstanding Awards, and the numerical
limit of Section 5.1 in such manner as the Committee (in its sole
discretion) shall determine to be appropriate to prevent the dilution or
diminution of such Awards.  In the case
of Options granted to Non-employee Directors pursuant to Section 9, the
foregoing adjustments shall be made by the Board, and any such adjustments also
shall apply to the future grants provided by Section 9.  Notwithstanding the preceding, the number of
Shares subject to any Award always shall be a whole number.


 


SECTION 5


STOCK
OPTIONS


 


5.1                                 Grant of Options.  Subject to the terms and provisions of the Plan, Options may be
granted to Employees and Consultants at any time and from time to time as
determined by the Committee in its sole discretion.  The Committee, in its sole discretion, shall determine the number
of Shares subject to each Option, provided that during any Fiscal Year, no
Participant shall be granted Options covering more than 4,000,000 Shares.  The Committee may grant Incentive Stock
Options, Non-qualified Stock Options, or a combination thereof.


 


5.2                                 Award Agreement.  Each Option shall be evidenced by an Award Agreement that shall
specify the Exercise Price, the expiration date of the Option, the number of
Shares to which the Option pertains, any conditions to exercise of the Option,
and such other terms and conditions as the Committee, in its discretion, shall
determine.  The Award Agreement shall
specify whether the Option is intended to be an Incentive Stock Option or a
Non-qualified Stock Option.


 


5.3                                 Exercise Price.  Subject to the provisions of this Section 5.3, the Exercise
Price for each Option shall be determined by the Committee in its sole
discretion.


 


5

















 


5.3.1                        Non-qualified Stock Options.  In the case of a Non-qualified Stock Option,
the Exercise Price shall be not less than one hundred  percent  (100%)
of the Fair Market Value of a Share on the Grant Date.


 


5.3.2                        Incentive Stock Options.  In the case of an Incentive Stock Option,
the Exercise Price shall be not less than one hundred percent (100%) of the
Fair Market Value of a Share on the Grant Date; provided, however, that if on
the Grant Date, the Employee (together with persons whose stock ownership is
attributed to the Employee pursuant to section 424(d) of the Code) owns
stock possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or any of its Subsidiaries, the Exercise
Price shall be not less than one hundred and ten percent (110%) of the Fair
Market Value of a Share on the Grant Date.


 


5.3.3                        Substitute Options.  Notwithstanding the provisions of Sections 5.3.1 and 5.3.2, in
the event that the Company or an Affiliate consummates a transaction described
in section 424(a) of the Code (e.g., the acquisition of property or stock
from an unrelated corporation), persons who become Employees or Consultants on
account of such transaction may be granted Options in substitution for options
granted by their former employer.  If
such substitute Options are granted, the Committee, in its sole discretion and
consistent with section 424(a) of the Code, shall determine the exercise
price of such substitute Options.


 


5.4                                 Expiration of Options.


 


5.4.1                        Expiration Dates.  Each Option shall terminate no later than the first to occur of
the following events:


 


(a)                                  The
expiration of ten (10) years from the Grant Date; or


 


(b)                                 The
expiration of three (3) months from the date of the Participant’s Termination
of Service for a reason other than the Participant’s death, Disability or
Retirement; or


 


(c)                                  The
expiration of one (1) year from the date of the Participant’s Termination of
Service by reason of Disability; or


 


(d)                                 The
expiration of three (3) years from the date of the Participant’s Retirement
(subject to Section 5.8.2 regarding Incentive Stock Options); or


 


(e)                                  The
date of the Participant’s Termination of Service by the Company for cause (as
determined by the Company); or


 


(f)                                    The
date for termination of the Option determined by the Committee in its sole
discretion and set forth in the written Award Agreement.


 


5.4.2                        Death of Participant.  Notwithstanding Section 5.4.1, if a
Participant who is an Employee dies prior to the expiration of his or her
Options, his or her Options shall be exercisable until the expiration of three
(3) years after the date of death.  If a
Participant who is a Consultant dies prior to the expiration of his or her
Options, the Committee, in its discretion, may provide that his or her Options
shall be exercisable for up to three (3) years after the date of death.


 


5.4.3                        Committee Discretion.  Subject to the limits of Sections 5.4.1 and
5.4.2, the Committee, in its sole discretion, (a) shall provide in each Award
Agreement when each Option expires and becomes unexercisable, and (b) may,
after an Option is granted and before such Option expires, extend the maximum
term of the Option (subject to Section 5.8.4 regarding Incentive Stock
Options).


 


5.5                                 Exercisability of Options.  Options granted under the Plan shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall determine in its sole discretion.  After an Option is granted, the Committee, in its sole
discretion, may accelerate the exercisability of the Option.  If a


 


6

















 


Participant dies while an Employee, the exercisability
of his or her Options shall be fully accelerated to the date of Termination of
Service.


 


5.6                                 Payment. 
Options shall be exercised by the Participant’s delivery of a written
notice of exercise to the Secretary of the Company (or its designee), setting
forth the number of Shares with respect to which the Option is to be exercised,
accompanied by full payment for the Shares.


 


Upon the exercise of any Option, the Exercise Price
shall be payable to the Company in full in cash or its equivalent.  The Committee, in its sole discretion, also
may permit exercise (a) by tendering previously acquired Shares having an
aggregate Fair Market Value at the time of exercise equal to the total Exercise
Price, or (b) by any other means which the Committee, in its sole discretion,
determines to both provide legal consideration for the Shares, and to be
consistent with the purposes of the Plan.


 


As soon as practicable after receipt of a written
notification of exercise and full payment for the Shares purchased, the Company
shall deliver to the Participant (or the Participant’s designated broker),
Share certificates (which may be in book entry form) representing such Shares.


 


5.7                                 Restrictions on Share Transferability.  The Committee may impose such restrictions
on any Shares acquired pursuant to the exercise of an Option as it may deem
advisable, including, but not limited to, restrictions related to applicable
Federal securities laws, the requirements of any national securities exchange
or system upon which Shares are then listed or traded, or any blue sky or state
securities laws.


 


5.8                                 Certain Additional Provisions for
Incentive Stock Options.


 


5.8.1                        Exercisability. 
The aggregate Fair Market Value (determined on the Grant Date(s)) of the
Shares with respect to which Incentive Stock Options are exercisable for the
first time by any Employee during any calendar year (under all plans of the
Company and its Subsidiaries) shall not exceed $100,000.


 


5.8.2                        Termination of Service.  If any portion of an Incentive Stock Option
is exercised more than three (3) months after the Participant’s Termination of
Service for any reason other than Disability or death (unless (a) the
Participant dies during such three-month period, and (b) the Award Agreement or
the Committee permits later exercise), the portion so exercised shall be deemed
a Non-qualified Stock Option.


 


5.8.3                        Company and Subsidiaries Only.  Incentive Stock Options may be granted only
to persons who are employees of the Company or a Subsidiary on the Grant Date.


 


5.8.4                        Expiration. 
No Incentive Stock Option may be exercised after the expiration of ten
(10) years from the Grant Date; provided, however, that if the Option is
granted to an Employee who, together with persons whose stock ownership is
attributed to the Employee pursuant to section 424(d) of the Code, owns
stock possessing more than ten percent (10%) of the total combined voting power
of all classes of the stock of the Company or any of its Subsidiaries, the
Option may not be exercised after the expiration of five (5) years from the
Grant Date.


 


5.9                                 Grant of Reload Options.  The Committee may provide in an Award
Agreement that a Participant who exercises all or part of an Option by payment
of the Exercise Price with already-owned Shares, shall be granted an additional
option (a “Reload Option”) for a number of shares of stock equal to the number
of Shares tendered to exercise the previously granted Option plus, if the
Committee so determines, any Shares withheld or delivered in satisfaction of
any tax withholding requirements.  As
determined by the Committee, each Reload Option shall (a) have a Grant Date
which is the date as of which the previously granted Option is exercised, and
(b) be exercisable on the same terms and conditions as the previously granted
Option, except that the Exercise Price shall be determined as of the Grant
Date.


 


7

















 


SECTION 6


STOCK
APPRECIATION RIGHTS


 


6.1                                 Grant of SARs. 
Subject to the terms and conditions of the Plan, SARs may be granted to
Employees and Consultants at any time and from time to time as shall be
determined by the Committee, in its sole discretion.  The Committee shall have complete discretion to determine the
number of SARs granted to any Participant, provided that during any Fiscal
Year, no Participant shall be granted SARs covering more than 4,000,000 Shares.


 


6.2                                 Exercise Price and Other Terms.  The Committee, subject to the provisions of
the Plan, shall have complete discretion to determine the terms and conditions
of SARs granted under the Plan. 
However, the exercise price of an SAR shall be not less than one hundred
percent (100%) of the Fair Market Value of a Share on the Grant Date.


 


6.3                                 SAR Agreement. 
Each SAR grant shall be evidenced by an Award Agreement that shall
specify the exercise price, the term of the SAR, the conditions of exercise,
and such other terms and conditions as the Committee, in its sole discretion,
shall determine.


 


6.4                                 Expiration of SARs.  A SAR granted under the Plan shall expire
upon the date determined by the Committee, in its sole discretion, and set
forth in the Award Agreement. 
Notwithstanding the foregoing, the rules of Section 5.4 also shall
apply to SARs.


 


6.5                                 Payment of SAR Amount.  Upon exercise of a SAR, a Participant shall
be entitled to receive payment from the Company in an amount determined by
multiplying:


 


(a)                                  The
difference between the Fair Market Value of a Share on the date of exercise
over the exercise price; times


 


(b)                                 The
number of Shares with respect to which the SAR is exercised.


 


6.6                                 Payment Upon Exercise of SAR. At the
discretion of the Committee, payment for a SAR may be in cash, Shares or a
combination thereof.


 


SECTION 7


RESTRICTED
STOCK


 


7.1                                 Grant of Restricted Stock.  Subject to the terms and provisions of the
Plan, the Committee, at any time and from time to time, may grant Shares of
Restricted Stock to Employees and Consultants in such amounts as the Committee,
in its sole discretion, shall determine. 
The Committee, in its sole discretion, shall determine the number of
Shares to be granted to each Participant, provided that during any Fiscal Year,
no Participant shall be granted more than 400,000  Shares of Restricted Stock.


 


7.2                                 Restricted Stock Agreement.  Each Award of Restricted Stock shall be
evidenced by an Award Agreement that shall specify the Period of Restriction,
the number of Shares granted, any price to be paid for the Shares, and such
other terms and conditions as the Committee, in its sole discretion, shall
determine.  Unless the Committee
determines otherwise, Shares of Restricted Stock shall be held by the Company
as escrow agent until the restrictions on such Shares have lapsed.


 


7.3                                 Transferability.  Shares of Restricted Stock may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated until the end of the
applicable Period of Restriction.


 


7.4                                 Other Restrictions.  The Committee, in its sole discretion, may impose such other
restrictions on Shares of Restricted Stock as it may deem advisable or
appropriate, in accordance with this Section 7.4.


 


8

















 


7.4.1                        General Restrictions.  The Committee may set restrictions based
upon the achievement of specific performance objectives (Company-wide, business
unit or individual), applicable federal or state securities laws, or any other
basis determined by the Committee in its discretion.


 


7.4.2                        Section 162(m) Performance Restrictions.  For purposes of qualifying grants of
Restricted Stock as “performance-based compensation” under section 162(m)
of the Code, the Committee, in its discretion, may set restrictions based upon
the achievement of Performance Goals. 
The Performance Goals shall be set by the Committee on or before the
latest date permissible to enable the Restricted Stock to qualify as
“performance-based compensation” under section 162(m) of the Code.  In granting Restricted Stock which is
intended to qualify under section 162(m) of the Code, the Committee shall
follow any procedures determined by it from time to time to be necessary or
appropriate to ensure qualification of the Restricted Stock under
section 162(m) of the Code (e.g., in determining the Performance Goals).


 


7.4.3                        Legend on Certificates.  The Committee, in its discretion, may legend
the certificates representing Restricted Stock to give appropriate notice of
such restrictions.  For example, the
Committee may determine that some or all certificates representing Shares of
Restricted Stock shall bear the following legend:


 


“The sale or other transfer of the shares of stock
represented by this certificate, whether voluntary, involuntary, or by
operation of law, is subject to certain restrictions on transfer as set forth
in the Varian Medical Systems, Inc. Omnibus Stock Plan, and in a Restricted
Stock Agreement.  A copy of the Plan and
such Restricted Stock Agreement may be obtained from the Secretary of Varian
Medical Systems, Inc.”


 


7.5                                 Removal of Restrictions.  Shares of Restricted Stock covered by each
Restricted Stock grant made under the Plan shall be released from escrow as
soon as practicable after the last day of the Period of Restriction.  The Committee, in its discretion, may
accelerate the time at which any restrictions shall lapse, and remove any
restrictions.  After the restrictions
have lapsed, the Participant shall be entitled to have any legend or legends
under Section 7.4 removed from his or her Share certificate, and the
Shares shall be freely transferable by the Participant.


 


7.6                                 Voting Rights. 
During the Period of Restriction, Participants holding Shares of
Restricted Stock granted hereunder may exercise full voting rights with respect
to those Shares, unless otherwise provided in the Award Agreement.


 


7.7                                 Dividends and Other Distributions.  During the Period of Restriction,
Participants holding Shares of Restricted Stock shall be entitled to receive
all dividends and other distributions paid with respect to such Shares unless
otherwise provided in the Award Agreement. 
If any such dividends or distributions are paid in Shares, the Shares
shall be subject to the same restrictions on transferability and forfeitability
as the Shares of Restricted Stock with respect to which they were paid.


 


7.8                                 Return of Restricted Stock to Company.  On the date set forth in the Award
Agreement, the Restricted Stock for which restrictions have not lapsed shall
revert to the Company and again shall become available for grant under the
Plan.


 


SECTION 8


PERFORMANCE
UNITS AND PERFORMANCE SHARES


 


8.1                                 Grant of Performance Units and Shares.  Performance Units and Performance Shares may
be granted to Employees and Consultants at any time and from time to time, as
shall be determined by the Committee, in its sole discretion.  The Committee shall have complete discretion
in determining the number of Performance Units and Performance Shares granted
to any Participant, provided that during any Fiscal Year, no more than 400,000
Performance Shares or Performance Units may be granted to any Participant.


 


9

















 


8.2                                 Initial Value. 
Each Performance Unit shall have an initial value that is established by
the Committee on or before the Grant Date, provided that such value shall not
exceed the Fair Market Value of a Share on the Grant Date.  Each Performance Share shall have an initial
value equal to the Fair Market Value of a Share on the Grant Date.


 


8.3                                 Performance Objectives and Other
Terms.  The Committee shall set
performance objectives in its discretion which, depending on the extent to
which they are met, will determine the number or value of Performance Units or
Shares that will be paid out to the Participants.  The Committee may set performance objectives based upon the
achievement of Company-wide, business unit, or individual goals, or any other
basis determined by the Committee in its discretion.  The time period during which the performance objectives must be
met shall be called the “Performance Period.” 
Each Award of Performance Units or Shares shall be evidenced by an Award
Agreement that shall specify the Performance Period, and such other terms and
conditions as the Committee, in its sole discretion, shall determine.


 


8.3.1                        General Performance Objectives.  The Committee may set performance objectives
based upon the achievement of Company-wide, business unit or individual goals,
or any other basis determined by the Committee in its discretion.


 


8.3.2                        Section 162(m) Performance Objectives.  For purposes of qualifying grants of
Performance Units or Shares as “performance-based compensation” under
section 162(m) of the Code, the Committee, in its discretion, may
determine that the performance objectives applicable to Performance Units or
Shares shall be based on the achievement of Performance Goals.  The Performance Goals shall be set by the
Committee on or before the latest date permissible to enable the Performance
Units or Shares to qualify as “performance-based compensation” under
section 162(m) of the Code.  In
granting Performance Units or Shares which are intended to qualify under
section 162(m) of the Code, the Committee shall follow any procedures
determined by it from time to time to be necessary or appropriate to ensure
qualification of the Performance Units or Shares under section 162(m) of
the Code (e.g., in determining the Performance Goals).


 


8.4                                 Earning of Performance Units and
Performance Shares. 
After the applicable Performance Period has ended, the Participant shall
be entitled to receive a payout of the number of Performance Units or Shares
earned during the Performance Period, depending upon the extent to which the
applicable performance objectives have been achieved.  After the grant of a Performance Unit or Share, the Committee, in
its sole discretion, may reduce or waive any performance objectives for Award.


 


8.5                                 Form and Timing of Payment.  Payment of earned Performance Units or
Performance Shares shall be made as soon as practicable after the expiration of
the applicable Performance Period.  The
Committee, in its sole discretion, may pay such earned Awards in cash, Shares
or a combination thereof.


 


8.6                                 Cancellation. 
On the date set forth in the Award Agreement, all unearned or unvested
Performance Units or Performance Shares shall be forfeited to the Company, and
again shall be available for grant under the Plan.


 


SECTION 9


NON-EMPLOYEE
DIRECTORS


 


9.1                                 Granting of Options.


 


9.1.1                        Non-employee Directors.  Each Non-employee Director shall be granted
an Option to purchase 40,000 Shares (an “Initial Grant”) on the later of the
Effective Date of the Plan or the date of the Non-employee Director’s
appointment or election as a Non-employee Director.  Thereafter, for so long as the Non-employee Director serves as
such, he or she annually shall be granted an Option for an additional 20,000
Shares (each a “Subsequent Grant”). 
Each such Subsequent Grant shall be made on the first business day after
each Annual Meeting of Stockholders occurring after the date of the Initial
Grant or previous Subsequent Grant, but only if the Non-employee Director has
continuously served as such through the Grant Date.


 


10

















 


9.1.2                        Chairman.  Each
Chairman of the Company who is a Non-employee Director shall be granted an
Option to purchase 400,000 Shares (an “Initial Chairman’s Grant”) on the later
of the Effective Date of the Plan or the date such individual becomes
Chairman.  Thereafter, for so long as
such individual serves as Chairman, he or she annually will be granted an
Option for an additional 20,000 Shares (each a “Subsequent Chairman’s
Grant”).  Each such Subsequent
Chairman’s Grant shall be made on the first business day after each Annual
Meeting of Stockholders occurring after the date of the Initial Chairman’s
Grant or previous Subsequent Chairman’s Grant, but only if the individual has
continuously served as Chairman through the Grant Date.  Any Initial Chairman’s Grant or Subsequent
Chairman’s Grant shall be in lieu of any Initial Grant or Subsequent Grant the
Chairman otherwise would be entitled to under Section 9.1.1.


 


9.2                                 Terms of Options.


 


9.2.1                        Option Agreement.  Each Option granted pursuant to this Section 9 shall be
evidenced by a written stock option agreement which shall be executed by the
Non-employee Director and the Company.


 


9.2.2                        Exercise Price.  The Exercise Price for the Shares subject to each Option granted
pursuant to this Section 9 shall be one hundred percent (100%) of the Fair
Market Value of such Shares on the Grant Date.


 


9.2.3                        Exercisability.  Each Option granted pursuant to this Section 9 shall be
fully exercisable on the Grant Date.


 


9.2.4                        Expiration of Options.  Each Option shall terminate upon the first
to occur of the following events:


 


(a)                                  The
expiration of ten (10) years from the Grant Date; or


 


(b)                                 The
expiration of three (3) months from the date of the Non-employee Director’s
Termination of Service for a reason other than death, Disability, resignation
or Retirement; or


 


(c)                                  The
expiration of three (3) years from the date of the Non-employee Director’s
Termination of Service by reason of completion of the Participant’s term as a
Director, Disability or Retirement; or


 


(d)                                 The
expiration of one (1) month from the date of the Non-employee Director’s
Termination of Service by reason of resignation.


 


9.2.5                        Death of Director.  Notwithstanding Section 9.2.4, if a Non-employee Director
dies prior to the expiration of his or her options in accordance with
Section 9.2.4, his or her options shall terminate three (3) years after
the date of his or her death.


 


9.2.6                        Not Incentive Stock Options.  Options granted pursuant to this
Section 9 shall not be designated as Incentive Stock Options.


 


9.2.7                        Other Terms. 
All provisions of the Plan not inconsistent with this Section 9
shall apply to Options granted to Non-employee Directors; provided, however,
that Section 5.2 (relating to the Committee’s discretion to set the terms
and conditions of Options) shall be inapplicable with respect to Non-employee
Directors.


 


9.3                                 Substitute Options.  Notwithstanding the provisions of
Section 9.2.2, in the event that the Company or an Affiliate consummates a
transaction described in section 424(a) of the Code (e.g., the acquisition
of property or stock from an unrelated corporation), persons who become
Non-employee Directors on account of such transaction may be granted Options in
substitution for options granted by their former employer.  If such substitute


 


11

















 


Options are granted, the Committee, in its sole
discretion and consistent with section 424(a) of the Code, shall determine
the exercise price of such substitute Options.


 


9.4                                 Elections by Non-employee Directors.  Pursuant to such procedures as the Board (in
its discretion) may adopt from time to time, each Non-employee Director may
elect to forego receipt of all or a portion of the annual retainer, committee
chair fees, meeting attendance fees and other cash compensation otherwise due
to the Non-employee Director in exchange for Shares.  The number of Shares received by any Non-employee Director shall
equal the amount of foregone compensation divided by the Fair Market Value of a
Share on the date that the compensation otherwise would have been paid to the
Non-employee Director, rounded up to the nearest whole number of Shares.  In addition, pursuant to such procedures as
the Board (in its discretion) may adopt from time to time, each Non-employee
Director may elect to forego receipt of all or a portion of the annual
retainer, committee chair and meeting attendance fees and other cash
compensation otherwise due to the Non-employee Director in exchange for an
Option to purchase Shares.  The number
of Shares subject to such an Option received by any Non-employee Director shall
equal the amount of foregone compensation multiplied by four (4) and divided by
the Fair Market Value of a Share on the date that the compensation otherwise
would have been paid to the Non-employee Director, rounded up to the nearest
whole number of Shares.  All Options
granted pursuant to this Section 9.4 shall be subject to the restrictions
of Section 9.2.


 


SECTION 10


MISCELLANEOUS


 


10.1                           No Effect on Employment or Service.  Nothing in the Plan shall interfere with or
limit in any way the right of the Company to terminate any Participant’s
employment or service at any time, with or without cause.  For purposes of the Plan, transfer of
employment of a Participant between the Company and any one of its Affiliates
(or between Affiliates) shall not be deemed a Termination of Service.  Employment with the Company and its
Affiliates is on an at-will basis only.


 


10.2                           Participation. 
No Employee or Consultant shall have the right to be selected to receive
an Award under this Plan, or, having been so selected, to be selected to
receive a future Award.


 


10.3                           Indemnification.  Each person who is or shall have been a
member of the Committee, or of the Board, shall be indemnified and held
harmless by the Company against and from (a) any loss, cost, liability, or
expense that may be imposed upon or reasonably incurred by him or her in
connection with or resulting from any claim, action, suit, or proceeding to
which he or she may be a party or in which he or she may be involved by reason
of any action taken or failure to act under the Plan or any Award Agreement,
and (b) from any and all amounts paid by him or her in settlement thereof, with
the Company’s approval, or paid by him or her in satisfaction of any judgment
in any such claim, action, suit, or proceeding against him or her, provided he
or she shall give the Company an opportunity, at its own expense, to handle and
defend the same before he or she undertakes to handle and defend it on his or
her own behalf.  The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification
to which such persons may be entitled under the Company’s Certificate of
Incorporation or Bylaws, by contract, as a matter of law, or otherwise, or
under any power that the Company may have to indemnify them or hold them
harmless.


 


10.4                           Successors. 
All obligations of the Company under the Plan, with respect to Awards
granted hereunder, shall be binding on any successor to the Company, whether
the existence of such successor is the result of a direct or indirect purchase,
merger, consolidation or otherwise, of all or substantially all of the business
or assets of the Company.


 


10.5                           Beneficiary Designations.  If permitted by the Committee, a Participant
under the Plan may name a beneficiary or beneficiaries to whom any vested but
unpaid Award shall be paid in the event of the Participant’s death.  Each such designation shall revoke all prior
designations by the Participant and shall be effective only if given in a form
and manner acceptable to the Committee. 
In the absence of any such designation, any vested benefits remaining
unpaid at the Participant’s death shall be paid to the Participant’s estate
and, subject to the terms of the Plan and of the applicable Award Agreement,
any unexercised vested Award may be exercised by the administrator or executor
of the Participant’s estate.


 


12

















 


10.6                           Nontransferability of Awards.  No Award granted under the Plan may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will, by the laws of descent and distribution, or to the limited extent
provided in Section 10.5.  All
rights with respect to an Award granted to a Participant shall be available
during his or her lifetime only to the Participant.


 


10.7                           No Rights as Stockholder.  Except to the limited extent provided in
Sections 7.6 and 7.7, no Participant (nor any beneficiary) shall have any of
the rights or privileges of a stockholder of the Company with respect to any
Shares issuable pursuant to an Award (or exercise thereof), unless and until
certificates representing such Shares shall have been issued, recorded on the
records of the Company or its transfer agents or registrars, and delivered to
the Participant (or beneficiary).


 


10.8                           Withholding Requirements.  Prior to the delivery of any Shares or cash
pursuant to an Award (or exercise thereof), the Company shall have the power
and the right to deduct or withhold, or require a Participant to remit to the
Company, an amount sufficient to satisfy federal, state, local and foreign
taxes (including the Participant’s FICA obligation) required to be withheld
with respect to such Award (or exercise thereof).  Notwithstanding any contrary provision of the Plan, if a
Participant fails to remit to the Company such withholding amount within the
time period specified by the Committee (in its discretion), the Participant’s
Award may, in the Committee’s discretion, be forfeited and in such case the
Participant shall not receive any of the Shares subject to such Award.


 


10.9                           Withholding Arrangements.  The Committee, in its sole discretion and
pursuant to such procedures as it may specify from time to time, may permit or
require a Participant to satisfy all or part of the tax withholding obligations
in connection with an Award by (a) having the Company withhold otherwise
deliverable Shares, or (b) delivering to the Company already-owned Shares
having a Fair Market Value equal to the amount required to be withheld.  The amount of the withholding requirement
shall be deemed to include any amount which the Committee determines, not to
exceed the amount determined by using the maximum federal, state, local and
foreign jurisdiction marginal income tax rates applicable to the Participant
with respect to the Award on the date that the amount of tax to be withheld is
to be determined.  The Fair Market Value
of the Shares to be withheld or delivered shall be determined as of the date
that the taxes are required to be withheld.


 


10.10                     Deferrals. 
The Committee, in its sole discretion, may permit a Participant to defer
receipt of the payment of cash or the delivery of Shares that would otherwise
be delivered to a Participant under the Plan. 
Any such deferral elections shall be subject to such rules and
procedures as shall be determined by the Committee in its sole discretion.


 


SECTION 11


AMENDMENT,
TERMINATION AND DURATION


 


11.1                           Amendment, Suspension or Termination.  The Board, in its sole discretion, may amend
or terminate the Plan, or any part thereof, at any time and for any reason. The
amendment, suspension or termination of the Plan shall not, without the consent
of the Participant, alter or impair any rights or obligations under any Award
theretofore granted to such Participant. 
No Award may be granted during any period of suspension or after
termination of the Plan.


 


11.2                           Duration of the Plan.  The Plan shall commence on the date
specified herein, and subject to Section 11.1 (regarding the Board’s right
to amend or terminate the Plan), shall remain in effect thereafter.  However, without further stockholder
approval, no Incentive Stock Option may be granted under the Plan after ten
(10) years from the Effective Date.


 


SECTION 12


LEGAL
CONSTRUCTION


 


12.1                           Gender and Number.  Except where otherwise indicated by the
context, any masculine term used herein also shall include the feminine; the
plural shall include the singular and the singular shall include the plural.


 


13

















 


12.2                           Severability.  In the event any provision of the Plan shall be held illegal or
invalid for any reason, the illegality or invalidity shall not affect the
remaining parts of the Plan, and the Plan shall be construed and enforced as if
the illegal or invalid provision had not been included.


 


12.3                           Requirements of Law.  The granting of Awards and the issuance of
Shares under the Plan shall be subject to all applicable laws, rules and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.


 


12.4                           Governing Law. 
The Plan and all Award Agreements shall be construed in accordance with
and governed by the laws of the State of California, but without regard to its
conflict of law provisions.


 


12.5                           Captions. 
Captions are provided herein for convenience only, and shall not serve
as a basis for interpretation or construction of the Plan.


 


EXECUTION


 


IN WITNESS WHEREOF, Varian Medical Systems, Inc., by
its duly authorized officer, has executed the Plan on the date indicated below.


 


 


	
   

  	
  VARIAN MEDICAL SYSTEMS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated: 
  July 30, 2004

  	
  By

  	
  /s/ Joseph B. Phair

  	
   

  
	
   

  	
   

  	
    Name:

  	
  Joseph B. Phair

  
	
   

  	
   

  	
    Title:

  	
  Vice President, Administration,

  General Counsel & Secretary

  
						



 


14